(Bloomberg) -- Oil prices jumped following media reports of Russian missiles crossing into Poland and after sections of Europe’s biggest pipeline were halted.
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West Texas Intermediate futures reversed an earlier decline, climbing more than 3% to trade above $88. Hungarian refiner MOL said part of the Druzhba pipeline, Europe’s largest was halted after a power outage affected some sections of the conduit. Poland’s Prime Minister Mateusz Morawiecki convened an extraordinary meeting of the National Security Committee, government spokesman Piotr Muller said on Twitter.
Earlier, prices were weighed down by the International Energy Agency said global oil consumption is poised to contract by 240,000 barrels a day this quarter compared with a year ago. Earlier this week, OPEC cut its fourth-quarter demand forecast. Consumption concerns extended deep into market guages, with the timespread for US crude falling to its weakest level in seven weeks.
While crude has lost about a third of its value since early June on economic slowdown concerns, the fundamental picture still remains tight. The Organization of Petroleum Exporting Countries and its allies have started trimming output and European Union sanctions on Russia will curb flows from December. With oil inventories in developed nations having fallen to the lowest since 2004, it leaves global markets vulnerable as sanctions on Russian exports take effect, according to the IEA’s monthly report.
“Tight world diesel supplies should keep a floor on crude, and is the longer term bullish driver” said Dennis Kissler, senior vice president at Bok Financial Securities.
--With assistance from Alex Longley.
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